...followed by one chapter of evasiveness and some relatively unsurprising conclusions. The Price of Liberty is being marketed as an analysis of our current quagmire in conducting our national defense against terrorism. Good marketing, no doubt, but for this reader the chief value of the book is historiographical. Beginning with Alexander Hamilton and his brilliant schemes to pay for the Revolution after the fact, Hormats has written what amounts to a history of the American economy in terms of tax policies and the debates about taxes. Because that history is a kind of 'punctuated equilibrium', Hormats vaults from war to war, not unlike an old-fashioned high school textbook: the Revolution, the War of 1812, the Civil War, WW1, WW2, the Cold War, Vietnam, with passing references to the other events of warfare in the two centuries of American coping. But the principal actors in Hormats's military history are not generals; rather they are secretaries of the treasury, leading congressmen, and presidents often overshadowed by their own administrations. This amounts to a fresh and thought-provoking history of the United States as a whole over the 'long duration'.
Hormats begins by expounding his vision of Hamilton's Vision. It's quickly obvious that Hormats himself is Hamiltonian to the core. Hamilton was the prime advocate of strongly managerial federal powers - Big Government - employing taxation and fiscal mechanisms like his national bank to stimulate the growth of the economy, especially the manufacturing sector. Part of Hamilton's vision, Hormats, says, was to build the financial stability to support a secure national defense. The contrary vision of Thomas Jefferson - an agrarian, states' rights centered isolationism - didn't play out very successfully during Jefferson's own administration or during that of his Virginian successors, but it has never faded away. During every subsequent crisis of the federal budget in wartime, more or less the same fault lines of difference have ruptured Congress; military preparedness versus social spending, borrowing versus pay-as-you-go, sales/excise taxes versus income/property taxes, and with increasing acrimony, progressive taxation of the wealthy versus regressive taxation of the masses. Even such seemingly current notions as 'supply side economics' have had previous incarnations in Congressional debate, as Hormats amply demonstrates.
Hormats also documents the uneven success of presidents at controlling the fiscal policies of their administrations, including those whose own parties controlled Congress. The most interesting chapter in the book - chapter 5, A Righteous Might - focuses on FDR's frustrations with the coalition of Republicans and conservative Democrats who actually wrote most of the tax laws of the New Deal era. Conservatives and libertarians of the present era would do well to re-examine Roosevelt's record in light of Hormats's revelations, rather than demonizing FDR for decisions which weren't entirely his to make.
The weakest chapter in The Price of Liberty deals with the administration of Ronald Reagan. Hormats carefully exposes the naive irresponsibilty of Reagan and his economic advisors - their refusal to adjust their Reaganomic theories to the realities around them - yet he is oddly evasive about the results. Like most Reaganites, he exaggerates both the novelty and the impact of Reagan's Cold War tactics, even though he has already acknowledged the continuity of such tactics from Truman to Carter. He pays quick lip-service to Gorbachev's declaration that the USSR collapsed chiefly from internal failures, yet he credits the pressures of budgetary competition with toppling Communism. That's an odd paradox. If the Soviet Communist economic system was so dysfunctional in comparison to Capitalism, why did it take 60 years to falter? On the other hand, if it was dysfunctional, why should Reagan get credit for tipping it over? [My own opinion, lest I be accused of leftist sympathies, matches Gorbachev's - that the USSR was dysfunctional economically and socially, and suffered a well-deserved collapse of its own making.]
Hormats is distinctly positive, though less 'historical' in his approach, about the Gulf War policies of George H.W. Bush. Then, after no more than one clause of one sentence about the Clinton administration, Hormats delivers an indictment of the fiscal incapacities and blunders of the George W Bush debacle that could be read aloud as a campaign speech by any candidate of any other party.
I won't summarize Hormats's concluding recommendation for a sounder fiscal policy to prepare the US for the future. The value of this book, in my mind, is not Hormats's plan to pay for the War on Terrorism but rather his insightful historical recounting of the payments of the past. Definitely a five-star history, but I've deducted one star for slipping from history to journalistic opinion-making in its final chapters.
